When a court decides whether an arbitral tribunal had jurisdiction, does the losing party get another try? In Grace v. United Mexican States,[1] the Ontario Court of Appeal said no.
Background
For a more detailed review of the factual background and the lower court’s reasons, see our previous blog post titled “Ontario Superior Court of Justice drills through ICSID decision in NAFTA oil rig dispute over bias.” In short, the investors brought a NAFTA Chapter 11 claim against Mexico in 2018. The arbitration was seated in Toronto and administered by ICSID under the UNCITRAL Arbitration Rules. The case concerned the investors’ offshore oil rig operation, which they alleged Mexico had driven out of business. In 2024, the tribunal issued an award finding that it had no jurisdiction.
The investors applied to set the award aside. They argued that the tribunal’s jurisdictional analysis was flawed and alleged a reasonable apprehension of bias in relation to one of the tribunal members. The Superior Court ultimately agreed with the investors and set the award aside. Mexico appealed, and the investors moved to quash the appeal.
The Court of Appeal’s decision
The Court granted the investors’ motion and quashed the appeal. Under s. 11 of the International Commercial Arbitration Act, 2017 (ICAA), a party may ask the Superior Court to decide on a tribunal’s ruling on jurisdiction, and that decision “is not subject to appeal.” In the Court’s view, “the language of this provision is clear.”
Mexico argued that s. 11 of the ICAA covers only preliminary rulings, not awards, so its challenge to the tribunal’s award declining jurisdiction belonged under Article 34 of the UNCITRAL Model Law and could be appealed. The Court disagreed. The award dealt only with jurisdiction and bias and never reached liability or damages, which made it no different from a preliminary decision declining jurisdiction, which in the Court’s view is properly captured by s. 11 of the ICAA. The tribunal’s decision not to bifurcate did not take the case outside s. 11. With the jurisdictional appeal gone, the Court found it unnecessary to address the bias holding.
Key takeaways
The decision confirms that, in Ontario, the Superior Court’s determination of a tribunal’s jurisdiction is final. Even where an award is set aside on grounds other than jurisdiction, such as a reasonable apprehension of bias, there is no avenue to appeal the lower court’s ruling if the award is akin to a preliminary finding on jurisdiction. Parties to Ontario-seated arbitrations should therefore treat the set-aside application as their one and only opportunity to contest jurisdiction before the courts.
Dentons’ global network of arbitration lawyers advises clients on all arbitration matters. For more information on this topic, please contact the authors, Chloe Snider, Emily McMurtry and Ramy Sarouf.
[1] Grace v. United Mexican States, 2026 ONCA 700.
